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Report from
Europe
Tropical suppliers at Carrefour report greater market
stability
Tropical timber suppliers at the Carrefour Internationale
du Bois (CIB) exhibition in Nantes said there were signs
the European market is steadying after a challenging 2023-
early 2024. The broad consensus was that trade would
remain at about the same level as last year, although some
went as far as predicting improvement, albeit modest and
gradual.
At the same time, trade issues and challenges were also
raised. They included rising freight rates, administrative
delays in securing export paperwork and the latest tropical
hardwood CITES Appendix II listings.
Another key topic of discussion at the show was the time
and effort businesses must invest in preparing for the EU
Deforestation Regulation (EUDR). There is now just six
and half months before it comes into force. It will require
that operators and large traders placing timber and other
‘forest and eco-system risk commodities’ (FERCS) on the
EU market, or exporting them from it, undertake due
diligence to ensure they are deforestation-free, legal, and
accompanied by geolocation coordinates of the ‘plot of
land’ where they originated.
Carrefour cemented status as a global event
The show itself maintained its record of growing and
evolving each time it comes around. Visitors and
exhibitors alike also said it further cemented its status as
Europe’s leading all-timber trade show and as a global
event.
According to the organisers, visitor numbers were down
around 500 from 2022’s record 14,000. But exhibitors
attributed the bumper total two years ago to the post-Covid
bounce that boosted the timber market globally.
They also pointed out that this year’s attendance was over
17% up on the previous all-time high in 2018 (the 2020
show was cancelled due to the pandemic).
The show occupied more space this year at Nantes’
Beaujoire fair ground. Another change was the sectoral
compartmentalisation of the event, with the individual
halls dedicated to flooring, wood-based panels, timber
building and construction services, and sawmills, timber
trade and forestry. This, said attendees, made it easier to
navigate.
While acknowledging their market perceptions were yet to
be underpinned with categoric statistics, exhibitors also
felt show attendance indicated the mood of the wider
European timber sector was on the turn, after the 18-
month cost of living crisis hit consumer and business
spending across the board.
The return of confidence, albeit, as one exhibitor described
it, ‘embryonic’, was attributed to inflation decreasing (and
the EU area rate was down to 2.6% in May from a 2022
peak of over 10%) and the prospect of lower interest rates.
The European Central Bank reduced its rates for the first
time in five years just days after the CIB in June to 3.75%.
ECB president Christine Lagarde cautioned they were not
necessarily now on a ‘linear path’ downwards, but
according to a Reuters report, financial commentators
expect a further cut this year and three or four in 2025.
Challenging outlook for EU construction
One EU tropical importer-distributor said ‘reasonable’
forecasts for construction underpinned their belief that the
year ahead would be ‘unexciting, but OK’. One such
forecast came from the Dutch ING bank in March in
which it reported signs of ‘green shoots’ in the building
sector.
After construction output volumes grew 0.1% in 2023, it
actually expects 0.5% contraction in 2024. This is due to
anticipated further declines in residential and non-
residential building rates.“ However, the renovation
subsector (including sustainability works) is seeing
structural growth in demand,” said ING. “We also expect
that investments in infrastructure will continue to grow.”
Other positive signs, it says, are rising house prices in
many EU countries and the fact that construction costs
have plateaued. Building contractors’ order books have
also remained stable, currently averaging 9.1 months. ING
puts this down to the level of repair, maintenance, and
improvement activity (RMI) and work to improve building
energy and wider sustainability performance.
It concludes that there is ‘room for optimism’ for 2025.
“We expect growth trends in the renovation and
infrastructure sectors will continue,” it said. “The new
building sector in the short term [will be constrained by]
the declining amount of issued building permits, but we
expect it to slowly improve too due to the recovering
housing market.”
The outlook for UK building looks more challenging. The
country’s Construction Product Association (CPA)
forecasts an overall 2.1% fall in building output this year,
due to falls in new housing and RMI, the two biggest UK
construction sectors.
However, infrastructure building remains strong, and the
squeeze in RMI is expected to be alleviated to a degree by
‘strong activity in energy efficiency retrofit’. And in 2025
the CPA expects falling interest rates (which currently
stand at 5.25% but are expected to be cut to 4.75% by the
end of 2024), plus general economic recovery to return
construction output to 2% growth in 2025. New house
building is forecast to grow 4%.
A UK tropical timber importer-distributor at the CIB
acknowledged trade was currently ‘sluggish’. “There’s
plenty of wood on the ground – whatever you want,
sapele, meranti, eucalyptus grandis, you can get it,” they
said. “However, trade is on more of a level, and against
the backdrop of the recent challenging economic
conditions, level is not a bad thing. And the forecast
recovery in building into 2025 spells a healthier joinery
sector.”
A leading EU importer trader at the CIB agreed that the
volatility of the market had ‘subsided’ and was expecting
its European turnover and volumes through 2024 to
remain around 2023 levels. “And in some countries we are
seeing improvement, notably France and Belgium,” said a
spokesperson.
Another importer thought that the fraught geopolitical
situation was also “less of a depressant on business”. “It
seems companies and consumers have now factored it in,
and its effect on purchasing decisions is less,” they said.
A Europe and Africa-based concession holder, processor
and value-added goods producer took a similar line. “In
the second half of 2023 business slowed down, but the
market is stabilizing and many of the visitors to our stand
have been positive about prospects,” said a company
spokesperson. “We’ve also seen people from a wider
geographic spread than at the last CIB, indicating more
confidence internationally. We’ve had visitors from China,
Vietnam, the US, and North Africa and, in particular, a lot
from the Middle East.”
Underlining the company’s own long-term confidence, it
was highlighting its latest investment at its Congo Basin
subsidiary in further-processed products. It is expanding
its edging and other machining capabilities, increasing
kilning capacity, and has installed a large-scale new
finger-jointing line.
“We see our future increasingly in value-added tropical
timber products,” said the spokesperson. “And we have
further developments in the pipeline.”
Another EU importer trader at the show said they were
also growing their sales in engineered tropical hardwoods.
“It’s becoming a very competitive commodity market, but
it is important to move in this direction for the future of
the tropical trade, to increase producer country revenue
and boost yield,” said a spokesperson. “We are developing
sales in laminated and finger jointed products for windows
and doors.”
The same company is also increasing its focus on certified
sustainable lesser-known tropical timber species (LKTS).
This was seen as important on environmental grounds, to
reduce supply stress on more commonly used species and
help make certified sustainable forest management more
economically viable. But the move was also aimed at
ensuring timber availability and broadening customer
choice.
With cumaru and ipe among recent CITES Appendix II
listings, the company was offering a range of South
American alternatives.
“We’re promoting balsamo, tanimbuca, sucupira preta and
jutai, all ideal for decking,” said a spokesperson.
The company also highlighted substitutes for Siberian
larch, which is barred from EU and UK markets by trade
embargoes on Russia.
“Thermo-treated temperate hardwoods and Douglas fir are
being seen as alternatives and we’re also focusing on
ayous and louro vermelho, which performs particularly
well as cladding,” said a spokesperson.
A UK importer-distributor said it remained a challenge to
overcome UK joinery sector “conservatism” about using
LKTS.
“The unpredictable density of some of these species is a
particular issue for joiners,” they said. “But we think the
opportunity for them is in engineered, finger jointed and
laminated goods, which can help overcome this issue as
they need less processing, and you can sell them on end
use rather than species. In fact, we’re going to West Africa
soon especially to evaluate new engineered hardwood
sourcing possibilities. Currently we’re buying African
timber-based engineered products made by Malaysian
manufacturers.”
Another EU-African business agreed on the importance of
developing tropical LKTS.
“Two we are currently developing are olon and olonvogo,”
said a spokesperson at the CIB. “Olonvogo is a
particularly good alternative to iroko, which increasingly
we cannot source in sufficient volume to meet demand.”
Documentation delays in Brazil a concern
“[It’s] taking at least one to two months to obtain LPCO
documents [Licences, Permits, Certificates and other
Documents] and a container shortage is extending wait
times by another month,” said the hardwood purchasing
manager for an EU importer trader.
“Ipe prices have also risen due to limited supply and
increased demand, especially from the USA, leading to a
scarcity of 21 x 145 mm sizes, particularly from suppliers
in the state of Para.”
He added that the impact on trade in ipe and cumaru due
to their CITES listings, effective from 24 November 2024,
is adding to uncertainty.
“There’s a possibility supply may become very difficult
towards the end of this year or early next,” he said. “There
is uncertainty regarding issuance of CITES permits in the
country of origin and import permits in the destination
country. Shipments from October may halt due to neither
exporters nor importers wanting to take the risk of
contravening the rules.” Price rises in affected species
were also expected as the CITES listing date approaches.
Freight rate increases from Southeast Asia were also
highlighted. They may still be someway off heights
reached through the pandemic. But having dropped back
since to USUS$2,000 per 40ft container, they are now
quoted as up to US$8,000.
“Rates have skyrocketed,” said the hardwood purchasing
manager. “We’re now paying between US$5000 and
US$6000 per container, leading to increases of €100 to
€150 /m3. This will slow down supply and inevitably raise
prices. And importers will reduce purchases or halt
shipments, leading to decreased stocks in Europe. In fact,
shortages are already noticeable, including in meranti,
bangkirai, gerutu, and merbau.”
A UK importer said that, if the Suez Canal remained off
limits due to Houthi movement attacks on shipping, freight
rates levels would stay high. “And there’s clearly
opportunism at play too, with shipping companies raising
rates over and above their cost increases,” they said.
Exhibitor perspectives and preparation strategies for
EUDR vary
A UK importer said that, even though the country was
outside the EU it would inevitably be affected, adding that
the Regulation created “huge uncertainties”. “We have
branches in Northern Ireland, which is still in the EU
single market, and also in Ireland in the EU,” said a
spokesperson.
“Many of our manufacturer customers also sell into the
EU and are already asking us about supplying compliance
information. Whether we’ll have to dedicate people
specifically to managing all the data required remains to
be seen. It’s unclear what the impacts will be.”
An EU importer agreed the Regulation was increasing
their administrative workload and that they were working
with suppliers, including in the tropics, to increase
awareness of the EUDR information they would need.
They were also developing software systems “to manage,
collect and store [compliance] information”. That included
“geolocation coordinates of sources of supply and risk
analysis data”.
They were also evaluating the use of Orbify’s geospatial
data platform for natural assets monitoring to support
conformance and pushing ahead with their aim to trade in
100% certified timber.
“With latest developments in FSC and PEFC schemes to
align with EUDR requirements, while we may not be able
to say, ‘we’re certified, so we’re fully compliant’, we
believe certification will be a significant mitigation
instrument,” said a spokesperson.
A hardwood supplier with concessions in the Republic of
the Congo felt the combination of certification of its forest
management and timber production, plus its own data and
traceability systems would facilitate compliance.
“We also already provided geolocation information
covering the whole of our concessions as part of legality
assurance under the EU Timber Regulation, with a single
concession in its entirety counting as a plot of land [under
the new rules]. And we also draw on Global Forest Watch
satellite monitoring of forest cover,” said a spokesperson.
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